Speaking at the 14th annual Wraps, Platforms & Masterfunds conference in the Hunter Valley last week, Mr Johnston said the “instos of recent times” have caused a series of problems for advisers.
“[They] have really caused a lot of problems – cutting off their income streams, taking their clients away from them,” Mr Johnston said.
“I agree with Dr Hewson, I think the banks should get out of it,” he said, referring to comments by former Liberal leader Dr John Hewson earlier in the conference.
“I think [that’s] the reason why a lot of advisers are getting into the SMSF market is because they are tired of the banks controlling their income streams and controlling their clients,” he said.
Mr Johnston also said the scandals that have unfolded within the financial advice industry, while unfortunate for the public, “worked in the independents’ favour”.
“The CBA thing with Financial Wisdom was unfortunate for the public, but I think it is very good for the independent sector of the marketplace,” Mr Johnston said.
“So thanks to the CBA, it has kind of eased the way for independents to fight back, and I think now we have seen so many advisers jumping out of the institutional advisory space, wanting to get their own licence, so I think this is a significant change.”
Mr Johnston also pointed the finger at former financial services minister and current Labor Party leader Bill Shorten saying he targeted the independent advice space through taking away their income streams.
“Shorten had an agenda – in fact, I know he did – against the independent market,” Mr Johnston said.
“They saw that the banks were probably a bit too strong to knock out of the way as competition to their industry super funds and [saw] the independents as a soft target,” he said.
“Therefore they tried to cut our income streams by saying platforms are financial products,” Mr Johnston said.
A bit rich for Mr Johnston to throw stones – He sounds like someone in a 20 year old marriage, in bed with but cant stand them!!!
AIOFP is an aggregator business thats makes its margin from product providers (instos), those licensees have far more liabilities in their adviser network with no controls over quality of advice – Its only a matter of time before the spotlight is put on them. ASIC are about 5 years behind in paperwork.
Im not condoning the Insto channel and whats gone on with the CBA licensees, the reality is that the name Peter Johnston & AIOFP arent really headlines (known) for the media to fumble over. The sooner this industry gets some clean air the better, hold your tongue if its putting more turbulence into an already unsteady sector for your own personal gain!
Sounds like a lot of hot air from the AIOFP. The reality of the situation when you rationally look at it is that there is no perfect system, and if ever the insto’s had to divest themselves of their adviser distribution force, then the IFA space would also suffer as we would be far less efficient to deal with via the multitude of Licensees versus the fund managers simply going direct and doing a deal with the ISA (which most already do to a large degree). Anyone who believes removing the instos with financial and political clout from our side of the field, and that they would be happy sitting on the sidelines, is living fairly and squarely with the pixies in fantasy land. To quote Walter Mathauu in Grumpier Old Men “It must be wonderful living in La-LA Land. I’ll have to come visit you sometime”.
The big institutions have used their political muscle to create the myth that they can market direct to the public and provide consumer protection. The misleading ads and the failed attempts at managing employed ‘advisers’ are indefensible. Clients that are seeking an advice relationship want an enduring personal relationship they can trust that does not change when the institution changes its strategy or is taken over by another institution. Consumers that want to do it themselves and surf the net etc should be informed that no advice is being provided and buyer beware. We are currently in a void where this distinction is not clear enough for the customer to understand.
One of the reality checks after all the emotional activity is that starting a new licence means losing any grandfathered annuity stream from Volume Payments. It’s unlikely that a subsidised practice from a bank aligned network will get its own licence pay fully for the same level of licence support and lose its historical margin sharing of VB. they have had the chance to do that for years and still stuck with the model that was the cheapest and underpinned by a balance sheet. Much noise much emotion no tsunami ofchange.